You have been asked to help a local company evaluate a major capital expenditure. The company is a new internet company and must buy a large computer system which will generate additional revenue. The company provides you with the following information:

Requirement: Write a letter to the president of the company explaining whether the company should acquire the computer system, using NPV.

Notes: Assume that the initial $41,850,000 in annual revenues will grow at a 6% annual rate and that the initial $35,750,000 in annual expenses will grow at a 5% annual rate. The growth starts in year 2 from year 1, i.e. the revenue is year 2 is 44,361,000, etc. Working capital is released at the end of the project.

You have been asked to help a local company evaluate a major capital expenditure. The company is a new internet company and must buy a large computer system which will generate additional revenue. The company provides you with the following information:Requirement: Write a letter to the president of the company explaining whether the company should acquire the computer system, using NPV. Notes: Assume that the initial $41,850,000 in annual revenues will grow at a 6% annual rate and that the initial $35,750,000 in annual expenses will grow at a 5% annual rate. The growth starts in year 2 from year 1, i.e. the revenue is year 2 is 44,361,000, etc. Working capital is released at the end of the project. You have been asked to help a local company evaluate a major capital expenditure. The company is a new internet company and must buy a large computer system which will generate additional revenue. The company provides you with the following information:Requirement: Write a letter to the president of the company explaining whether the company should acquire the computer system, using NPV. Notes: Assume that the initial $41,850,000 in annual revenues will grow at a 6% annual rate and that the initial $35,750,000 in annual expenses will grow at a 5% annual rate. The growth starts in year 2 from year 1, i.e. the revenue is year 2 is 44,361,000, etc. Working capital is released at the end of the project